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Financial Market Update – Week of 02/26

February 26, 2024

Major U.S. equity indices traded well last week, with the Dow, Nasdaq 100, and S&P 500 all posting weekly gains. The upward trend continued on the heels of some blowout numbers from artificial intelligence (AI) and chip giant NVIDIA. There is a lot of buzz as a result, so here is the latest to keep you up to speed.

Overall, tallying results from last week, the S&P 500 gained 1.66% to close at an all-time weekly closing high, the Nasdaq 100 added 1.42%, and the Dow Jones Industrial Average increased by 1.30%.

NVIDIA Earnings Beat

Better-than-expected earnings results from semiconductor giant NVIDIA, released after the bell on Wednesday, propelled major U.S. stock indexes higher on Thursday, resulting in the NASDAQ rallying by nearly 3%. This was its biggest single-day gain in over a year.

What may be the stock of our time and the largest beneficiary of the AI theme, NVIDIA posted revenue up 265% courtesy of its booming AI business. The stock rose in extended-hour trading after the results and conference call and provided a monstrous dose of strength for the next day’s trading session across broader markets.

NVIDIA closed the week higher by over 8.5 %.

Fed Minutes = Mixed Tone

Perhaps overlooked by markets as NVIDIA stole the spotlight last week, the Federal Reserve (Fed) minutes from its most recent policy meeting were released last week. 

The meeting minutes showed a cautious yet optimistic tone from the Federal Open Market Committee (FOMC), indicating there would be no rate cuts until Fed members have “greater confidence” that inflation is receding.

“Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent,” the minutes stated.

Fed Minutes Interpretation

In other words, it sounds like the Fed is more concerned with cutting rates too quickly versus too slowly. Cutting too quickly could contribute to retriggering inflation.

The comments in the minutes seemed optimistic about the progress made in the fight against inflation. Market reaction to the minutes was somewhat muted as investors eagerly awaited NVIDIA earnings results.

You can read the full Fed minutes here.

Wall Street vs. Main Street

As the AI and megacap themes fuel gains on Wall Street and for long-term investors, it is just not an accurate reflection of the “actual economy” for many Americans.

The reality for many working Americans is one of living paycheck to paycheck (with 78% of Americans in this boat) and of survival, as high prices for just about everything have taken their toll.

The disconnect between Wall Street and Main Street is perhaps more prevalent than it has ever been, and the sacrifice required to secure one’s financial future is real.


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